IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CITY OF CHICAGO, a municipal ) corporation, ) Plaintiff, ) ) Case No. 14 CV 4361 v. ) ) Judge Jorge L. Alonso PURDUE PHARMA L.P., PURDUE ) PHARMA INC., THE PURDUE ) FREDERICK COMPANY INC., TEVA ) PHARMACEUTICALS USA INC., ) CEPHALON, INC., JOHNSON & ) JOHNSON, JANSSEN PHARMA- ) CEUTICALS, INC., ORTHO-MCNEIL- ) JANSSEN PHARMACEUTICALS, INC., ) n/k/a JANSSEN PHARMACEUTICALS, ) INC., JANSSEN PHARMACEUTICA, ) INC., n/k/a JANSSEN PHARMA- ) CEUTICALS, INC., ENDO HEALTH ) SOLUTIONS INC., ENDO PHARMA- ) CEUTICALS, INC., ALLERGAN PLC, ) f/k/a ACTAVIS PLC, ACTAVIS, INC., ) f/k/a WATSON PHARMACEUTICALS, ) INC., WATSON LABORATORIES, INC., ) ACTAVIS LLC, and ACTAVIS ) PHARMA, INC. f/k/a WATSON ) PHARMA, INC., ) Defendants. ) MEMORANDUM OPINION AND ORDER On May 8, 2015, the Court issued a Memorandum Opinion and Order ( May Order ) [288] granting most defendants motions to dismiss. All that remained from plaintiff s first amended complaint were Counts I and II (consumer fraud claims) against the Purdue entities. Plaintiff filed its second amended complaint [328] in August 2015 against all defendants alleging consumer fraud, misrepresentation, false statements, false claims, insurance fraud, and unjust enrichment, and seeking cost recovery for services provided. Plaintiff also alleges conspiracy to

2 defraud as to some defendants. Defendants motions to dismiss followed. Currently before the Court are: (1) Cephalon, Inc. and Teva Pharmaceuticals USA, Inc. s ( Cephalon defendants ) motion to dismiss [401]; (2) Allergan plc, Actavis Inc., Actavis LLC, Actavis Pharma, Inc., and Watson Laboratories, Inc. s ( Actavis defendants ) motion to dismiss [404]; (3) Endo Health Solutions Inc. and Endo Pharmaceuticals Inc. s ( Endo defendants ) motion to dismiss [407]; (4) Purdue Pharma L.P., Purdue Pharma Inc., and Purdue Frederick Company s ( Purdue defendants ) motion to dismiss [411]; (5) Janssen Pharmaceuticals Inc. and Johnson & Johnson s ( Janssen defendants ) motion to dismiss [416]; (6) defendants joint motion to dismiss or stay under the primary jurisdiction doctrine [415]; and (7) defendants joint motion to dismiss for failure to state a claim [423]. For the foregoing reasons, defendants joint motion to dismiss or stay under the primary jurisdiction doctrine is denied. The other six of defendants motions are granted in part and denied in part. BACKGROUND Plaintiff, the City of Chicago, alleges as follows. The defendant pharmaceutical companies, through a deceptive and unfair marketing campaign, reversed the medical understanding of opioids so that prescribing opioids to treat chronic pain long-term would be commonplace. (Second Am. Compl. ( SAC ) 7.) The City alleges that, to accomplish this goal, defendants, among other tactics, deployed sales representatives to doctors and other prescribers to deliver misleading messages about the use of opioids. (Id. 8.) These messages were designed to convince doctors that the benefits of using opioids to treat chronic pain outweighed the risks and that opioids could be used safely by most patients. (Id. 9.) 2

3 The Purdue defendants manufacture, promote, and distribute in Chicago, among other places, OxyContin, Butrans, and Hysingla ER. (Id ) 1 The Cephalon defendants manufacture, sell, and distribute in Chicago, among other places, Actiq and Fentora. (Id ) 2 The Janssen defendants manufacture, sell and distribute in Chicago, among other places, Duragesic, Nucynta, and Nucynta ER. (Id ) 3 The Endo defendants develop, market, and sell in Chicago, among other places, Opana ER and Opana. (Id ) 4 The Actavis defendants market and sell, in Chicago, among other places Kadian. (Id ) 5 Opioids have been regulated by the U.S. Drug Enforcement Administration ( DEA ) since 1970 and carry black box warnings of potential addiction, among other things. (Id. 58.) Studies from the 1970s and 1980s noted negative outcomes from long-term opioid therapy for pain management. (Id. 81.) Defendants marketing overstated the benefits and downplayed the risks of long-term opioid therapy to expand the chronic pain market. (Id ) Through their sales representatives and physician speakers, defendants disseminated their misrepresentations to Chicago-area prescribers, thereby generating more prescriptions and profits. (Id. 85, , , , , , , , ) 1 OxyContin, Butrans, and Hysingla ER are Schedule II and III opioids first approved in 1995, 2010, and 2014 respectively and indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. (SAC 29(a), (e), & (f).) 2 Actiq and Fentora are Schedule II opioids first approved in 1998 and 2006 respectively and indicated for the management of breakthrough cancer pain in patients 16 [and 18] years of age and older who are already receiving and who are tolerant to opioid therapy for their underlying and persistent cancer pain. (SAC 35 (a) & (b).) 3 Duragesic and Nucynta ER are Schedule II opioids first approved in 1990 and 2011 respectively and indicated for the management of pain in opioid-tolerant patients, severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. (SAC 40, 41(a).) Nucynta is a schedule II opioid first approved in 2008 and used for the relief of moderate to severe acute pain in patients 18 years of age or older. (Id. 41(b).) In January 2015, Depomed, Inc. acquired the rights to Nucynta and Nucynta ER from Janssen. (Id. 43.) 4 Opana ER and Opana are Schedule II opioids first approved in 2006 and indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate and relief of moderate to severe acute pain where the use of an opioid is appropriate respectively. (SAC 45 (a) & (b).) 5 Kadian is a Schedule II opioid first approved in 1996 and indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. (SAC 48.) 3

4 Defendants acted in concert with key opinion leaders and front groups to create, promote, and control the unbranded marketing of opioids to treat chronic pain, both nationally and in Chicago. (Id , 260, , 391, , 494, , 559, ) 6 Defendants knowingly disseminated unbranded marketing messages that were inconsistent with information on defendants branded marketing materials. (Id. 127.) Specifically, plaintiff asserts that each defendant and the third parties with which they conspired: (1) misrepresented that opioids improve function; (2) concealed the link between long-term use of opioids and addiction; (3) misrepresented that addiction risk can be managed; (4) masked the signs of addiction by calling them pseudoaddiction ; (5) falsely claimed that withdrawal is easily managed; (6) omitted the greater dangers from higher doses of opioids; (7) minimized the adverse effects of opioids and overstated the risks of NSAIDs; and (8) in the case of Purdue, that OxyContin provides a full twelve hours of pain relief. (Id ) 7 Because of defendants misleading and fraudulent direct marketing, doctors prescribed opioids to treat chronic pain. (Id. 634, 636.) As a result, doctors and pharmacies submitted false claims for opioid prescriptions to the City s health plans that were paid for by the City as medically necessary, and the City spent over $13 million on fraudulent claims for opioid prescriptions. (Id , , Exs. A & B.) The claims submitted for opioids to treat chronic pain were ineligible for payment because of defendants deceptive and unfair conduct. (Id. 663.) 6 [B]randed marketing, which identifies and promotes a specific drug, must: (a) be consistent with its label and supported by substantial scientific evidence; (b) not include false or misleading statements or material omissions; and (c) fairly balance the drug s benefits and risks. (SAC 119.) Unbranded marketing does not refer to a specific drug, but generally to a type of treatment. (Id. 126.) Unbranded materials are not typically submitted to or reviewed by the FDA. (Id. 127.) 7 NSAIDs, which stands for non-steroidal anti-inflammatory drugs, such as ibuprofen, are commonly used to treat pain. (SAC 80.) 4

5 Additionally, the City states that it has remedied all defects from the first amended complaint, with respect to each defendant, by identifying Chicago-area prescribers who received deceptive marketing messages and wrote opioid prescriptions for which the City paid, as well as specifying each defendant s editorial control over the deceptive and misleading marketing materials. Finally, plaintiff states that its second amended complaint alleges conspiracy claims between defendants and third parties and adds an unfair practices claim. STANDARD A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted. Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must give the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted). Under federal noticepleading standards, a plaintiff s [f]actual allegations must be enough to raise a right to relief above the speculative level. Id. Stated differently, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. (citing Twombly, 550 U.S. at 556). In reviewing the sufficiency of a complaint under the plausibility standard, [courts must] accept the well-pleaded facts in the complaint as true, but [they] need[ ] not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere 5

6 conclusory statements. Alam v. Miller Brewing Co., 709 F.3d 662, (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)). Rule 9(b) requires a party alleging fraud to state with particularity the circumstances constituting fraud. Fed. R. Civ. P. 9(b). This ordinarily requires describing the who, what, when, where, and how of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case. AnchorBank, FSB v. Hofer, 649 F.3d 610, 615 (7th Cir. 2011) (citation omitted); see also Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014). Rule 9(b) applies to all averments of fraud, not claims of fraud. Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007). A claim that sounds in fraud in other words, one that is premised upon a course of fraudulent conduct can implicate Rule 9(b) s heightened pleading requirements. Id. DISCUSSION Primary Jurisdiction Defendants Joint Motion to Dismiss or Stay [415] In its May Order, the Court denied defendants joint motion to stay or dismiss pursuant to the primary jurisdiction doctrine. Defendants again argue that the Court should stay or dismiss the second amended complaint under the same doctrine because there have been interim FDA developments and new case law, and the claims raised in the second amended complaint are pending before, or have already been rejected by the FDA. Plaintiff responds by arguing that the Court has already rejected defendants primary jurisdiction arguments and nothing has changed in the meantime that warrants the Court s reversal. Primary jurisdiction is a permissive doctrine that applies when resolving a claim requires the resolution of issues which, under a regulatory scheme, have been placed within the 6

7 special competence of an administrative body. United States ex rel. Sheet Metal Int l Assoc., Local Union 20 v. Horning Invs., LLC, 828 F.3d 587, 592 (7th Cir. 2016) (quoting United States v. W. Pac. Ry. Co. 352 U.S. 59, (1956)). There is no fixed formula for applying the doctrine and the decision to whether to [do so] depends upon a case by case determination whether, in view of the purposes of the statute involved, and the relevance of administrative expertise to the issue at hand, a court ought to defer initially to the administrative agency. Bradford Sch. Bus Transit v. Chi. Transit Auth., 537 F.2d 943, 949 (7th Cir. 1976) (quotations omitted). As previously noted, the Court is not being asked to adjudicate whether opioids are appropriate for the treatment of chronic, non-cancer pain or whether defendants drugs labels are accurate, but whether defendants deliberately misrepresented the risks, benefits, and superiority of opioids when marketing them to treat chronic pain, contrary to... scientific evidence and their own labels[.] (SAC 214.) Courts are equipped to adjudicate such claims. City of Chi. v. Purdue Pharma L.P., No. 14 C 4361, 2015 WL , at *4 (N.D. Ill. May 8, 2015); see also, e.g., In re Horizon Organic Milk Plus DHA Omega 3 Mktg. & Sales Practice Litig., 955 F. Supp. 2d 1311, 1349 (S.D. Fla. 2013) ( Plaintiffs claims rest on the determination of whether WhiteWave s brain health representations on its products labeling, in its advertisements, and on its website are false and/or misleading and whether customers purchased WhiteWave s products in reliance on these representations.... This is not a technical area in which the FDA has greater technical expertise than the courts as every day courts decide whether conduct is misleading. ); In re Bextra & Celebrex Mktg. Sales Practices & Prod. Liab. Litig., No. M: CRB, 2006 WL , at *12 (N.D. Cal. Aug. 16, 2006) ( The issue is not whether Celebrex has fewer GI complications than other over-counter NSAIDs; the 7

8 FDA has already determined that it does not. The issue is whether contrary to the FDA s findings, Pfizer nonetheless falsely claimed that Celebrex was superior. Courts and juries frequently decide similar false advertising claims. ). Accordingly, the Court finds defendants arguments about the FDA s ongoing investigations about the benefits and risks of using opioids to treat long-term chronic pain unpersuasive. Defendants also cite to a state superior court case in California where a factually similar case was stayed in August 2015, not under the doctrine of primary jurisdiction, but pursuant to the court s inherent authority to manage its own cases. In a tentative ruling staying the case, the court noted that the case would require the court to determine what the public and doctors need to be told about opioids and entailed much more than determining issues of false and misleading marketing. People v. Purdue Pharma L.P., 2015 WL , at *2 (Cal. Super. Ct. Aug. 27, 2015). This non-binding ruling does not persuade the Court that a stay is warranted here. See Tex. Indep. Producers & Royalty Owners Ass n v. EPA, 410 F.3d 964, 980 (7th Cir. 2005) ( [T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. ) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). Nothing in plaintiff s allegations, defendants arguments, or the law has changed since the Court s May Order that merits the Court s invocation of the primary jurisdiction doctrine or a stay. Accordingly, defendants motion to dismiss or stay [415] is denied. Motions to Dismiss Under 12(b)(6) The Court will describe the arguments in support of and in opposition to each motion before addressing them below count by count. 8

9 Defendants Joint Motion to Dismiss [423] In addition to their individual motions to dismiss, all defendants join together to assert that plaintiff has again failed to sufficiently plead fraud allegations pursuant to Fed. R. Civ. P. 8(a), 9(b), and 12(b)(6). First, the defendants allege that plaintiff has violated Rule 9(b) by lumping all defendants together as if they were a single company manufacturing one product and by failing to plead any of its claims in the particularized manner that the rule requires. Defendants further allege that plaintiff has failed to adequately plead causation for five of the counts in its second amended complaint and also fails to allege a cognizable injury. Defendants also argue that each of plaintiff s counts have claim-specific deficiencies. Specifically, they argue that: Count I must be dismissed to the extent it seeks relief for fraud prior to the November 19, 2008 enactment of MCC , the Chicago ordinance concerning consumer fraud; Count II must be dismissed because it does not allege facts showing the conduct to be unfair; Counts IV through VI and VIII must be dismissed because they fail to plead a false claim with any specificity and do not sufficiently allege causation; Count VII must be dismissed because it fails adequately allege causation or injury; Count IX must be dismissed because plaintiff fails to allege an agreement to violate the law or an act in furtherance of such an agreement with the required particularity; and Count X must be dismissed because plaintiff has failed to adequately allege it was harmed or that defendants caused harm. Plaintiff responds by arguing that its second amended complaint meets Rule 9(b) s pleading standard and adequately apprises each defendant of the claims against it. Further, plaintiff asserts that defendants have demanded, and the Court has rejected, the application of an unrealistic particularity standard as it relates to tying misrepresentations about specific drugs made to particular prescribers and the prescriptions written in reliance on those 9

10 misrepresentations. Plaintiff contends that defendants have the records of when their particular sales representatives met with prescribers and what was said. Additionally, plaintiff asserts that the Court recognized in its May Order that causation and injury are not elements of the consumer fraud claims. Moreover, plaintiff argues that whether defendants marketing messages are misleading and therefore actionable consumer fraud is a question of fact that cannot be resolved at the motion to dismiss stage. Plaintiff also argues that defendants deceptive and unfair marketing caused providers to submit claims to the City for opioids prescribed for chronic pain, impliedly certifying that the prescriptions were medically necessary, eligible for coverage, and were therefore paid by plaintiff. Cephalon Defendants Motion to Dismiss [401] In addition to the arguments set forth in the joint motion to dismiss, the Cephalon defendants argue that plaintiff s Unbranded Promotion Theory seeks to hold them responsible for lawful activities and that the Branded Promotion Theory conflates off-label promotion with fraud. 8 Finally, the Cephalon defendants argue that plaintiff s conspiracy claim must fail because it has not asserted a claim against any third-party organization. Plaintiff responds by arguing that is has identified eight Chicago-area prescribers who confirmed they received allegedly deceptive marketing messages from Cephalon regarding Actiq and Fentora. Plaintiff further asserts that the marketing campaign was deceptive because it falsely implied that the drugs were FDA-approved as safe and effective for the treatment of chronic pain and minimized the risk of addiction. Further, plaintiff argues it has alleged a sufficient basis to infer Cephalon s endorsement and control of those messages both directly and 8 Unbranded Promotion Theory refers to some of the Cephalon defendants sponsoring third-party activities and publications that made purportedly false statements about opioid drugs in general. (Cephalon Defs. Mem. in support of its Mot. to Dismiss at 1.) [402]. Branded Promotion Theory refers to plaintiff s allegations of off-label promotion. (Id. at 2.) 10

11 through third parties. Plaintiff also argues that the SAC alleges that misrepresentations were made to specific prescribers and that specific opioid prescriptions written by those prescribers, along with other facts which require the inference that defendants deceptive messages caused false claims to be presented to and paid by the plaintiff. Next, plaintiff argues that its allegations of conspiracy with the American Pain Foundation ( APF ) are sufficient to state a claim because, among other things, Cephalon created and disseminated deceptive materials to promote the use of opioids to treat chronic pain. Finally, plaintiff argues that it has sufficiently alleged claims for recovery for the cost of municipal services and unjust enrichment because it has identified specific prescribers who wrote City-reimbursed prescriptions as a result of defendants deceptive conduct. In reply, Cephalon states that plaintiff has failed to plead facts demonstrating that it made a misrepresentation or material omission in connection with any branded or unbranded promotional materials to any Chicago prescriber that caused that prescriber to write one of the prescriptions at issue. Actavis Defendants Motion to Dismiss [404] In addition to the argument that plaintiff s complaint should be dismissed for failing to meet the pleading requirements of Rules 8(a) and 9(b), the Actavis defendants argue that (1) they are not liable for any conduct related to Kadian before January 1, 2009 because none of the defendants owned or marketed Kadian before then and (2) the Court lacks personal jurisdiction over Allergan plc and Actavis, Inc. Plaintiff responds by arguing that its second amended complaint identifies seven Chicago-area prescribers who confirmed that they received allegedly deceptive marketing messages regarding Kadian. Plaintiff further asserts that prescribers cannot recall when 11

12 particular visits by defendants sales representatives occurred and that defendants are in a much better position to know those details because they track such information. Additionally, plaintiff asserts that it does not need to plead that any physician wrote a prescription in reliance on defendants misrepresentations because the consumer fraud claims do not require it, it has explained why defendants misrepresentations are false, and defendants can be held liable for omitting the risk of addiction notwithstanding their drug labels. Finally, plaintiff contends that the Court has already determined that it has personal jurisdiction over Allergan plc and Actavis, Inc. and there is no reason to revisit this ruling. The Court will briefly address the personal jurisdiction issue. In its May Order, the Court held that Actavis, Inc. s predecessor, Actavis Group, tracked the number of prescriptions Illinois doctors wrote for Kadian, and ranked the doctors by the number of prescriptions they wrote. City of Chi., 2015 WL , at *6. Additionally, there was evidence that showed that Actavis Inc. s predecessor, Actavis Group, kept a target list of Illinois doctors and marketed to them. Id.; see [254-2] and [254-5]-[254-13]. Accordingly, the Court found that these contacts were sufficient to give the Court specific jurisdiction over Actavis, Inc. Id. Actavis, Inc., submits identical declarations and makes identical arguments to those it made in the first round of motions to dismiss, save for one. (Compare 1st and 2d Hirt Decls. from FAC [221-1] and [221-2] with 1st and 2d Hirt Decls. from SAC [405-1] and [405-2].) Its new contention is that there are no allegations in the SAC that the entity known as Actavis Group is the predecessor of Actavis, Inc. or that such an entity ever existed. However, as plaintiff points out, Sheldon V. Hirt s declaration verifies that [o]n October 31, 2012, Watson Pharmaceuticals, Inc. completed its acquisition of the Actavis Group and subsequently changed its corporate name to Actavis, Inc. (2d Hirt Decl. 4-5 [405-2].) Actavis argues, in 12

13 a footnote, that the phrase Actavis Group is used solely as a term of convenience to describe the group of separate and distinct corporations that were acquired by Watson Pharmaceuticals, Inc. in (Actavis Mem. in Support of Mot. to Dismiss at 22 n.27.) [405]. Nonetheless, the plain language of the declaration is more persuasive than this unsworn allegation. Absent new evidence, the Court stands by its prior ruling that specific jurisdiction exists as to Actavis, Inc. The Court also found that there was sufficient evidence to make a prima facie case of jurisdiction as to Allergan plc when it concluded that the record suggested that Allergan plc continued the business of Actavis, Inc. City of Chi., 2015 WL , at *6. Allergan plc argues, as it did previously, that Actavis Inc. is a legally distinct entity from Allergan plc. Allergan plc presents no new evidence or argument that persuades the Court to reconsider its previous ruling. Accordingly, the Court rejects the argument that it lacks jurisdiction over Allergan plc. Endo Defendants Motion to Dismiss [407] The Endo defendants assert that plaintiff does not adequately allege a causal nexus between their alleged misconduct and any resulting injuries and that any causal chain that does exist is too attenuated to establish proximate cause. Endo also argues that plaintiff has failed to allege that any of the statements it made were fraudulent, that Endo exercised control over third-party organizations that made the alleged fraudulent statements, or that Endo conspired with a third party to commit an unlawful act. Plaintiff responds by arguing that it cannot be decided as a matter of law that defendants actions were or were not misleading; that is a question of fact that must be left for the jury. Further, plaintiff argues that it has identified ten Chicago-area prescribers who confirmed that 13

14 they received allegedly deceptive messages from Endo sales representatives regarding Opana and Opana ER. Plaintiff also asserts that it has alleged facts that support the inference of an agreement between Endo and third parties to promote opioid therapy. Purdue Defendants Motion to Dismiss [411] In addition to what is laid out in the defendants joint motion to dismiss, the Purdue defendants argue that the alleged misrepresentations are not misleading as a matter of law because they comport with the labeling approved by the FDA and could not have created a plausible likelihood of deception to prescribing physicians or claims administrators and that plaintiff has not sufficiently alleged Purdue exercised control over unbranded third-party materials. Finally, Purdue argues that plaintiff s revised allegations clarify that the two surviving claims against Purdue are now deficient as a matter of law. Plaintiff responds by arguing that whether defendants conduct creates a likelihood of deception is a factual question that should be left for the jury, it has sufficiently pleaded that Purdue deceptively marketed OxyContin to Chicago-area prescribers, and it has alleged that Purdue had control over third-party publications. Plaintiff further maintains that it has sufficiently detailed Purdue s conspiracy with APF to state a claim. Janssen Defendants Motion to Dismiss [416] The Janssen defendants argue that plaintiff fails to allege that any Chicago doctor who wrote a prescription for Duragesic or Nucynta ER that the plaintiff reimbursed was exposed to a misrepresentation about these drugs. 9 Janssen further contends that the alleged misrepresentations are not misleading or deceptive, particularly when examined in the context of Janssen s extensive warnings about opioid-related risks, and the unbranded materials are not 9 The Janssen defendants argue that Nucynta IR is not subject to the second amended complaint s attack on the use of long-acting opioids because it is an immediate-release pain reliever approved for moderate to severe acute pain in adults. (Janssen s Mem. in support of Mot. to Dismiss at 4.) [418]. 14

15 attributable to Janssen. Additionally, Janssen argues that plaintiff has not alleged that Janssen entered into an agreement that would support a civil conspiracy claim. Finally, the Janssen defendants assert that plaintiff has neither alleged wrongdoing by Johnson & Johnson nor pleaded facts sufficient for a claim of alter-ego liability. Plaintiff asserts that it has identified eleven Chicago-area prescribers who confirmed they received one or more deceptive marketing messages from Janssen sales representatives regarding Nucynta, Nucynta ER, Duragesic, and opioids generally. Plaintiff further argues that it has sufficiently alleged that Janssen deceptively promoted Nucynta IR for off-label chronic conditions. Additionally, plaintiff states that Janssen s argument and supporting exhibits are premature at the motion-to-dismiss stage. Plaintiff also contends that the allegations regarding an agreement between Janssen and a third party and the misleading nature of the resulting publication support the inference of a conspiracy by Janssen. Finally, plaintiff asserts that it has pleaded Johnson and Johnson s liability as a principal responsible for the acts of its agent, Janssen. The Court will briefly address Johnson & Johnson s liability. Plaintiff has alleged that Johnson & Johnson is the only company that owns more than ten percent of Janssen Pharmaceuticals, Inc. s stock, that it corresponds with the FDA regarding Janssen s products, and, upon information and belief, it controls the sale and development of Janssen Pharmaceuticals drugs. (SAC 39.) Plaintiff also asserts that Johnson & Johnson paid prescribers to speak about Janssen s opioids at Janssen s speakers bureau. (SAC , 552(d).) [T]he question of whether an agency relationship existed is a question of fact that is not properly resolved on a motion to dismiss. However,... a plaintiff must allege sufficient facts to 15

16 state a plausible claim that an agency relationship existed in order to survive a motion to dismiss. Johnke v. Espinal-Quiroz, Nos. 14-CV-6992, 14-CV-7364, 14-CV-7917, 2016 WL , at *9 (N.D. Ill. Feb. 5, 2016). If the alleged principal has the right to control the manner and method in which work is carried out by an alleged agent and... the alleged agent can affect the legal relationships of the principal[,] then an agency relationship exists. Chemtool, Inc., v. Lubrication Techs., 148 F.3d 742, 745 (7th Cir. 1998). Plaintiff s allegation that Johnson & Johnson controls the sale and development of Janssen s drugs is sufficient to create the inference that it is the principal because, if true, it demonstrates that Johnson & Johnson had control over how Janssen s work was carried out. Further, the assertion that Johnson & Johnson paid prescribers to speak at Janssen s speakers bureau is sufficient for the Court to infer that Janssen can affect Johnson & Johnson s legal relationships. Accordingly, at least for purposes of a motion to dismiss, the City has alleged enough for the Court to infer that Johnson & Johnson had an agency relationship with Janssen and can therefore be held liable for Janssen s actions as alleged in the SAC. Count I Deceptive Practices All Defendants Plaintiff alleges that all defendants engaged in deceptive practices in violation of MCC , which makes it unlawful for a business to engage in any act of consumer fraud, unfair method of competition, or deceptive practice while conducting any trade or business in the city, including [a]ny conduct constituting an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act. (SAC 739.) 10 Plaintiff asserts that defendants, through their control of third parties, engaged in deceptive practices when they made and 10 MCC (a) states: In construing this section, consideration shall be given to court interpretations relating to the Illinois Consumer Fraud and Deceptive Business Practice Act[.] It further instructs that [i]n construing this section, consideration shall also be given to the interpretations of the Federal Trade Commission and the federal courts relating to Section 5(a) of the Federal Trade Commission Act, 15 U.S.C

17 disseminated untrue, false, and misleading statements to Chicago prescribers and consumers to promote the sale and use of opioids to treat chronic pain. (Id. 742.) Plaintiff argues that the misleading statements, listed supra, were disseminated through an array of marketing techniques including in-person detailing, speaker events, continuing medical education, journal articles, and advertisements. (Id ) 11 Plaintiff further alleges that defendants assisted key opinion leaders and front groups develop, promote, and disseminate these misstatements. (Id. 746.) To state a claim of fraud under the Illinois Consumer Fraud Act ( ICFA ), plaintiff must allege: (1) a deceptive act or practice by the defendant; (2) the defendant s intent that the plaintiff rely on the deception; and (3) the occurrence of the deception during a course of conduct involving trade or commerce. Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002). Plaintiff argues that it does not have to allege injury and causation because this is an enforcement action. Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 160 (Ill. 2002) ( [A]n action brought by the Attorney General under section 2 [of ICFA]... does not require that any person has in fact been misled, deceived or damaged. ) (quoting 815 ILCS 505/2). [U]nlike a private litigant, the Attorney General need not demonstrate that defendants actions proximately harmed any consumers in order to establish her standing to litigate a violation of the [Illinois Consumer Fraud] Act and to seek injunctive and other relief as authorized[.] People ex rel. Madigan v. United Constr. of Am. Inc., 981 N.E.2d 404, 411 (Ill. App. Ct. 2012). While defendants argue that Oliveira and Madigan distinguish standing under ICFA from stating a claim under ICFA, plaintiff states that whether the issue is framed as standing or sufficiency of pleading, the cases it cites establish that causation need not be alleged in publicenforcement actions. The Court agrees. A deceptive practice violates the ICFA even if it 11 Detailers are sales representatives who visited physicians and their staff in their offices. (SAC 88.) 17

18 doesn t actually deceive or injure anyone... and the Illinois Attorney General has the power to investigate and enjoin such a practice without a showing of actual loss. Kim v. Carter s Inc., 598 F.3d 362, 365 (7th Cir. 2010). Accordingly, the City need not allege injury or causation to state a claim under ICFA. When a plaintiff alleges fraud under the ICFA, the heightened pleading standard of Rule 9(b) applies. Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011). Under such circumstances, a plaintiff must describe the who, what, where, when, and how of the fraud. U.S. ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009). In some instances, the particularity requirement of Rule 9(b) must be relaxed where the plaintiff lacks access to all facts necessary to detail his claim. Corley v. Rosewood Care Ctr., Inc., 142 F.3d 1041, 1051 (7th Cir. 1998); see also In re Testosterone Replacement Therapy Prod. Liab. Litig. Coordinated Pretrial Proceedings, Nos. 14 C 1748, 14 C 8857 & MDL No. 2545, 2016 WL , at *2-4 (N.D. Ill. Aug. 2, 2016) (stating that plaintiff s allegations about defendant pharmaceutical companies scheme as a whole suggested that an overly strict application of Rule 9(b) was inappropriate). The Court concludes that, in this context, the plaintiff has alleged enough to meet Rule 9(b) s particularity requirement. In the portions of the SAC the Court discusses below, the City has identified to which Chicago-area prescribers defendants representatives made alleged misstatements, what those alleged misstatements were, and generally when and where those alleged misrepresentations were made. The City has also asserted that specific dates and the identities of defendants sales representatives who made the detailing visits were closely tracked by defendants and such information will be disclosed in discovery. 18

19 Actavis Plaintiff alleges that: (1) Actavis sales representatives told Chicago prescribers that prescribing Actavis s opioids would improve their patients ability to function and improve their quality of life; (2) Kadian sales representatives told Chicago prescribers that Kadian was less addictive, less likely to be abused, and that NSAIDs were more toxic; and (3) specific Chicagoarea prescribers were detailed at their offices and Actavis-sponsored speaker events by Actavis representatives from 2006 to the present and were told that Kadian was difficult to abuse and less addictive. (SAC 221(d), 229(c)-(e), 252(c), 281, 296(a)-(g).) 12 Cephalon Plaintiff alleges that Cephalon sales representatives: (1) told Chicago prescribers that opioids would increase patients ability to function, improve their quality of life, and were safe even at high doses; (2) omitted discussion of addiction risks related to Cephalon s drugs in discussions with Chicago-area prescribers; (3) told Chicago prescribers that NSAIDs were more toxic than Cephalon s opioids; and (4) detailed specific Chicago prescribers about Actiq and Fentora at their offices and Cephalon-sponsored events from 2006 to the present and represented that patients could be screened to avoid addiction and that opioids would increase patients ability to complete daily living activities. (Id. 221(h), 229(h), 248(d), 252(e), 386(a)-(h).) The SAC does not provide names of Actavis or Kadian sales representatives or prescribers. Plaintiff states that each of the Chicago-area prescribers has been assigned a letter designation in the SAC and that it will disclose actual names in discovery. (Pl. s Resp. at 23.) [433]. Plaintiff also states that its interviews with prescribers focused on the period of 2006 to the present, but that prescribers could not recall with precision when particular detailing visits took place. (SAC 296 n.94.) Plaintiff argues that defendants closely track their sales representatives detailing visits and are in a much better position to know these dates than the City. 13 The SAC does not provide names of Cephalon sales representatives or prescribers. Plaintiff states that each of the Chicago-area prescribers has been assigned a letter designation in the SAC and that it will disclose actual names in discovery. (Pl. s Resp. at 23.) Plaintiff gives specific dates (May 23, 2014 and June 30, 2014) for two of the detailing events. (SAC 386(a).) Otherwise, plaintiff reiterates its argument that interviews with prescribers focused on 2006 to the present, that prescribers could not recall with precision when particular detailing visits took place, and that defendants closely track their sales representatives detailing visits and are in a much better position to know these dates than the City. (Id. 296 n.94, 686.) 19

20 Endo Plaintiff alleges that Endo sales representatives: (1) told Chicago prescribers that opioids would increase patients ability to function and improve their quality of life, that Endo s drugs were less addictive, less likely to be abused, and that NSAIDs were more toxic; and (2) detailed specific Chicago prescribers about Opana and Opana ER at their offices and Endo-sponsored events from 2006 to the present and represented that Endo s opioids were less addicting than other opioids and could help patients become more physically active. (Id. 221(n), 229(q), (s), 252(i), 392, 426, , 482(a)-(j), 488.) 14 Janssen Plaintiff alleges that Janssen sales representatives: (1) told Chicago prescribers that opioids would increase patients ability to function and improve their quality of life, that Janssen s drugs were less addictive and less likely to be abused, that Nucynta was not an opioid, and that patients on Janssen s drugs were less susceptible to withdrawal than those on other opioids; (2) maintain a website that claims concerns about opioid addiction are overstated; and (3) detailed specific Chicago-area prescribers about Nucynta at their offices and Janssensponsored events from 2006 to the present and represented that Janssen s opioids would increase patients ability to function, were less addictive, were less susceptible to withdrawal than their competitors, were an alternative to NSAIDs, and, in some instances, that Nucynta was an 14 The SAC does not provide names of Endo sales representatives or prescribers. Plaintiff states that each of the Chicago-area prescribers has been assigned a letter designation in the SAC and that it will disclose actual names in discovery. (Pl. s Resp. at 23.) Plaintiff gives specific dates (April 14, 2014, May 27, 2014, and September 12, 2014) for three of the detailing events. (SAC 482(a).) Otherwise, plaintiff reiterates its argument that interviews with prescribers focused on 2006 to the present, that prescribers could not recall with precision when particular detailing visits took place, and that defendants closely track their sales representatives detailing visits and are in a much better position to know these dates than the City. (Id. 296 n.94, 686.) 20

21 alternative to opioid therapy. (Id. 221(r), 229(w), (y)-(cc), 244(d), 252(l), 549, 551, 552(a)- (k), 554, 556.) 15 Purdue Plaintiff alleges that Purdue sales representatives: (1) told Chicago prescribers that Purdue s drugs would increase patients ability to function, were less addictive, were less likely to be abused, that the effects of withdrawal could be successfully managed, were as effective for treating patients long term, were less toxic than NSAIDs, and specifically that Butrans has a lower abuse potential than other drugs and OxyContin ER was less likely to be favored by addicts; (2) ran a website with misstatements about opioid-prescribing practices; and (3) detailed specific Chicago-area prescribers about OxyContin, Hysingla, and Butrans at their offices and Purdue-sponsored events from 2006 to the present and represented that Purdue s drugs have less potential for abuse, improve patient function, and are less addicting than other opioids. (Id. 221(x), 229(jj)-(mm), 238(d) and (g), 244(f) and (g), 248(l), 252(p), , 561, , 630(a), (c)-(i), (k)-(q).) 16 While defendants argue that plaintiff has not alleged how the statements defendants sales representatives made to Chicago prescribers were misleading, plaintiff contends that: opioids have been associated with the potential for abuse and addiction for hundreds of years and are 15 The SAC does not provide names of Janssen sales representatives or prescribers. Plaintiff states that each of the Chicago-area prescribers has been assigned a letter designation in the SAC and that it will disclose actual names in discovery. (Pl. s Resp. at 23.) Plaintiff gives specific dates (August 5, 2013, August 13, 2013, May 9, 2014, and July 21, 2014) for four of the detailing events. (SAC 552(a).) Otherwise, plaintiff reiterates its argument that interviews with prescribers focused on 2006 to the present, that prescribers could not recall with precision when particular detailing visits took place, and that defendants closely track their sales representatives detailing visits and are in a much better position to know these dates than the City. (Id. 296 n.94, 686.) 16 Purdue s website, In the Face of Pain ( was deactivated on October 1, 2015 (last accessed September 29, 2016). The SAC does not provide names of Purdue sales representatives or prescribers. Plaintiff states that each of the Chicago-area prescribers has been assigned a letter designation in the SAC and that it will disclose actual names in discovery. (Pl. s Resp. at 23.) Plaintiff also states that its interviews with prescribers focused on the period of 2006 to the present, but that prescribers could not recall with precision when particular detailing visits took place. (SAC 296 n.94.) Plaintiff argues that defendants closely track their sales representatives detailing visits and are in a much better position to know these dates than the City. 21

22 regulated by the DEA; studies of opioid use in chronic pain conditions have not demonstrated improvement in patients function; opioids taken long term are often addictive; there is no reliable scientific study evaluating the effectiveness of opioid-addiction mitigation strategies; the effects of opioid withdrawal are difficult and can include anxiety, nausea, vomiting, headaches, insomnia, and hallucinations; and risks such as a decline in immune function, dizziness, and potentially fatal interactions with other medications are known and serious. (Id. 56, 219, 223, , , , 249.) Plaintiff further alleges that despite these facts about opioid use, defendants disseminated the misrepresentations discussed supra. Defendants also argue that in light of the FDA-mandated product warnings that delineate the risks of opioid therapy, plaintiff has not alleged facts supporting a plausible inference of causation. While that may be, as has already been established, plaintiff need not allege causation in order to state a claim under the ICFA. In its May Order, the Court reject[ed] defendants argument that their alleged misrepresentations cannot be the basis for any fraud-based claim. City of Chi., 2015 WL , at *10. The Court stands by that order. See Travelers Indem. Co. v. Cephalon, Inc., 32 F. Supp. 3d 538, 552 (E.D. Pa. 2014) (dismissing fraud claims when the plaintiff did not allege any facts in the complaint that defendant drug company misrepresented the content of the labels). By also alleging that defendants sales representatives made the misrepresentations to particular Chicago-area prescribers, plaintiff has sufficiently alleged intent that occurred in the course of commerce. See Monster Energy Co. v. Wensheng, 136 F. Supp. 3d 897, 906 (N.D. Ill. 2015) ( [D]efendants expressly elected to do business with Illinois residents when they created online stores that shipped throughout the United States, including to Illinois.). Accordingly, the Court finds that plaintiff has alleged a claim for deceptive practices under the ICFA against each of the defendants. 22

23 Count II Unfair Practices All Defendants Plaintiff also contends that defendants violated MCC when they engaged in unfair acts and practices to promote the sale and use of opioids to treat chronic pain. (SAC 753.) Plaintiff asserts that defendants unfair acts include: (1) promoting opioids to the elderly and veterans to treat chronic pain in the face of known, heightened risks of opioid use to those populations; (2) engaging in untrue, false, and misleading marketing with third parties; (3) promoting advantages of opioid products in violation of FDA regulations; (4) failing to present a balance of benefit and risk information posed by opioids in violation of FDA regulations; (5) deliberately using unbranded marketing to evade FDA oversight; and (6) promoting opioids for off-label use. (Id. 755.) Plaintiff claims that defendants encouraged unfair practices by providing front groups and key opinion leaders with funding and technical support for the shared purpose of issuing unfair pro-opioid messaging. (Id. 756.) Plaintiff further alleges that defendants targeted their marketing to non-specialist physicians and non-physician prescribers who lacked the time and expertise to independently evaluate defendants claims. (Id. 758.) In order to state a claim for unfair practices, plaintiff must allege that the practice (1) offends public policy; (2) is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers. Robinson, 775 N.E.2d at 961. All three criteria need not be present to support a finding of unfairness. Batson v. Live Nation Entm t, Inc., 746 F.3d 827, 830 (7th Cir. 2014). Unfairness under ICFA depends on a case-by-case analysis. Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010). A practice offends public policy when it violates a standard of conduct contained in an existing statute or common-law doctrine that typically applies to such a situation. Boyd v. U.S. Bank, N.A., 787 F. Supp. 2d 747, 752 (N.D. Ill. 2011). Plaintiff argues that defendants practices 23

24 offend the policy of discouraging drug addiction in Illinois (745 ILCS 35/2), the public policy, enshrined in state and federal law, seeking to ensure that pharmaceuticals are marketed and utilized appropriately, and the public policy against victimization of vulnerable populations for profit. (Pl. s Resp. at 34.) The City asserts that even if it has failed to identify a particular statute or policy offended by the defendants conduct, courts look to public values and broader purposes of the law and not the letter of specific provisions. Defendants argue that the SAC only alleges a violation of the first of these policies and that the City cannot supplement its complaint through briefing. Further, the defendants assert that 745 ILCS 35/2 is a drug-intervention statute that is irrelevant to the City s claims. 17 The Court agrees that 745 ILCS 35/2 has no bearing on the City s claims as alleged. Additionally, while the City asserts in the SAC that the federal regulatory framework governing the marketing of specific drugs reflects a public policy designed to ensure that drug companies are responsible for providing prescribers with the information they need to accurately assess the risks and benefits of drugs for their patients, it also asks the Court to accept its inferred public policy. Without more than an assertion that these federal statutes reflect the public policy the City infers, the Court is hesitant to affirm that such a public policy exists or is one the legislature intended. [T]he determination of public policy is primarily a legislative function[.] Coleman v. E. Joliet Fire Prot. Dist., 46 N.E.3d 741, 757 (Ill. 2016). Accordingly, the Court finds that the City has not sufficiently alleged that defendants deceptive practices offended any public policy. The Seventh Circuit has held that a practice is immoral, unethical, oppressive, or unscrupulous when said conduct leaves the consumer little choice but to submit. Batson v. Live Nation Entm t, No. 11 C 1226, 2013 WL , at *5 (N.D. Ill. Mar. 13, 2013) (quoting 17 The stated purpose of 745 ILCS 35/2 is to promote and encourage use of the intervention process to help initiate successful treatment of alcoholism and drug addiction. The intent of this Act is to further this goal by providing tort immunity to persons who participate in such interventions. 24